Most companies are not as transparent as they say they are.
Sure, you let customers behind the curtain in a way that would shock the founders of yesteryear. You cop to a few embarrassments; you fall on your sword when there's a product recall or you make mistakes in customer service.
All well and good. But below is a checklist of three categories in which you could likely be far more transparent. Before I get to the list, let me give a shout-out to Harvard Business Review's Youngme Moon, whose "An Anti-Creativity Checklist for 2015" inspired this post's concept.
1. Traceability of end product.
What it means: Customers can go to your website, type in a unique number that came with whatever product they bought, and see how, where, and when it was sourced, assembled, packaged, batched, and shipped. You can imagine how useful something like this would be in the event of a recall.
Company to emulate: Tata Harper, a Whiting, Vermont-based maker of natural skin care products. The company offers its consumers something called Open Lab Traceability.
By entering the first three digits of the number on the bottom of your Tata Harper Skincare bottle, you can trace its origin in the company's lab. You'll learn the day it was hand-crafted, and see the name and photo of the employee who batched it.
Why it matters in 2015: It's not even summertime, and already 2015 is the year of the recall. The abridged list of companies recalling products--for brevity I'm omitting automakers--includes Harley-Davidson, Sabra, Trek Bicycle, Beech-Nut, Blue Bell, and Jeni.
Some of these companies are still figuring out where in their pipeline the problem occurred. When they do, they'll share it via the usual mix of outbound media: press releases, tweets, Facebook posts, and newly built "recall" sections of their sites.
Wouldn't it be better if consumers could proactively check their purchases by typing in a unique product number? Wouldn't a truly transparent company empower the customer to see for herself where her product was sourced and made?
If the category of traceability were truly transparent, most consumer product companies would have tracing systems like Tata Harper's. Perhaps not surprisingly, Tata Harper has never had a recall.
2. Pricing philosophies.
What it means: You explain why you charge what you charge. This includes details about how your prices allow you to make a fair margin while still providing value to the consumer. It might also explain why your competitors are overcharging.
Company to emulate: Tuft & Needle, a Phoenix-based online retailer of namesake branded mattresses. There's a section on the company's site that asks: "What does it cost to make the average mattress?"
Then there are answers: core "¨$150, "¨"¨cover "¨$80, "¨"¨sewing "¨$40, "¨"¨cutting "¨$15, finishing "¨$15, creating an actual cost of $300. Wholesale markup "¨$300,"¨ marketing "¨$300"¨"¨, retail markup "¨$1,800, "¨"¨and commissions "¨$300"¨ are what create a typical retail price of $3,000.
In this context, Tuft & Needle's mattress prices ($350 to $750) seem fair to both the company and the consumer.
The pricing transparency is baked into Tuft & Needle's origin story. Co-founders John-Thomas Marino and Daehee Park were "frustrated with the status quo" of retail mattress pricing and "started digging into it," says Park. Discovering how vast the markups could be compelled the co-founders to "provide transparency and education to customers at a disruptive price point."
Why it matters in 2015: Millennials love discounts. In their new book, Retail Revolution: Will Your Brick-and-Mortar Store Survive?, Harvard Business School faculty members Rajiv Lal and JosÃ© Alvarez and former HBS research associate Dan Greenberg present a compelling series of Millennial coupon statistics.
For example, in a survey of U.S. online shoppers buying consumer packaged goods, 55 percent aged 18 to 34 said they download coupons from coupon sites. That's far higher than older demographics: 38 percent of people ages 35 to 54 and 21 percent of people ages 54 and up.
This trend--succinctly stated as Millennials dig discounts--is fueling a host of other companies that are using transparency as part of their pricing pitch. Marc Lore's new startup, Jet.com, which aims to deliver "profit-free pricing" on consumer products, has at pre-launch raised $220 million and garnered a $600 million valuation. The company explains that all of its profit will come from its $50 annual membership fees.
Everlane, a San Francisco-based e-commerce clothing company, is another startup offering customers a glimpse into its pricing strategy. On its site, Everlane breaks down the costs involved to produce its garments and compares them with the marked-up price you might find at a large retailer. A merino blazer, for example, costs $23.85 for materials, $40.15 for labor, $5.48 for duties, and $1.50 for transport. Everlane sells it for $165, compared with the $395 traditional retail price. And if you want to learn more about the labor and materials, you can go Everlane's dedicated webpage for its sweater blazer factory in Dongguan, China.
What it means: You share the demographic data of your employees, leadership team, and board.
Company to emulate: Intel. For years the legendary chipmaker has released diversity reports and employee demographics broken down by job category, gender, and ethnicity. Intel also pledged to spend $300 million in the next five years for the sake of diversifying its work force.
While individual small businesses can't afford fiscal pledges of that magnitude, what they can do is publicly declare that a diversified work force is a goal. Part of transparency, after all, is pointing a finger at yourself and admitting you must improve in certain areas.
Why it matters in 2015: Because the public cares, and the public is keeping score. For example, a recent headline in Fortune read: "These Six Tech Giants Still Haven't Released Their Diversity Data."
The idea is not that you'll be shamed for nondisclosure of your demographics, though that's certainly possible. The idea is that such disclosures are of increasing interest to consumers. Starbucks's "Race Together" campaign (and the ensuing backlash) is one recent example.
Many dismissed the campaign as a publicity stunt. But the larger point here is that Starbucks's effort revealed how badly consumers want companies to walk the walk on diversity--rather than merely proposing high-minded conversations.